SolarWinds Acquires RMM Provider N-able for $120M

SolarWinds (NYSE:SWI) acquired N-able Technologies for $120 million in cash. The deal focuses on cloud-based managed services software for small businesses. The companies pledged that N-able's 100 percent channel-friendly approach would remain in place.

SolarWinds (NYSE:SWI) has acquired N-able Technologies for $120 Million in cash in a managed services provider (MSP) deal that is expected to close by the end of May. SolarWinds’ CEO Kevin Thompson positioned the buy as a move into the complimentary market of cloud-based managed services for small businesses.

SolarWinds executives said during a conference call that the company will immediately stop selling perpetual licenses to N-able's technology and going forward will only sell subscription licensing going forward -- cloud-based services.

N-able’s CEO Gavin Garbutt plans to retire while JP Jauvin will remain as general manager. Mike Cullen, Derik Belair and other N-able executives will remain in their current positions. An N-able spokeswoman said that the company’s previous 100 percent channel-friendly, go-to-market strategy will remain in place, and the N-able brand will also stay intact.

Here’s what SolarWinds CEO had to say about the deal: "We're excited to expand into another highly complementary branch of IT management that we believe is ripe for our disruptive go-to-market model.”

Garbutt added this: "We feel that this merger is a reflection of our industry-leading position and growth, the quality of our products and, most importantly, the performance of the N-able team worldwide."

The following is some quick background information about N-able as provided by a spokeswoman:

N-able is headquartered in Ottawa, Canada – and has offices in Europe and Australia – and currently employs approximately 180 people worldwide. N-able’s presence includes an installed base of more than 2600 MSPs who serve approximately 91,000 SMBs today.

N-able was founded in 2000 and, over the past 13 years, has garnered a strong reputation in the MSP market.

N-able’s flagship product is N-Central, the industry’s top RMM and IT service automation solution. N-Central offers Cloud-based, multi-tenant, remote monitoring and management for IT infrastructure such as desktops, servers, applications, and network devices.

N-able’s portfolio also includes additional products that address a wide range of IT management capabilities, including bandwidth management, mobile device management, security, backup, patch management and IT service automation.

Discuss this Article 8

I missed that part of the call, but execs said that revenue going forward will be different because of plans to immediately shut down the perpetual license model. N-able will start contributing to earnings in the second half of 2014

Here's an educated guess. Numbers are NOT official nor confirmed. I suspect N-able is about a $15M to $20M business. I think the deal values N-able at 6X to 8X annual revenues. But that's a bit of a shot in the dark on my part. We're checking in to see if SolarWinds has disclosed the figure publicly.
-jp

So its safe to guess that NAble was either not profitable or barely turning anything? With that many employees it would be tough to be in the black. I'm curious how many MSP software companies are actually making anything.

Anonymous: All my sources have indicated that N-able was profitable in recent years. I believe the vast majority of MSP-oriented software companies -- the top 10 or so -- are profitable. The real challenge has been overall market size. It hasn't been big enough or growing fast enough to attract IT industry giants. Plus selling to MSPs is a really, really difficult process since many MSPs themselves have slim IT budgets...
-jp

Joe, that means, 5 times of top line, which, I feel is too high for a product company selling perpetual licenses. Don't you think? With a reported 3000 MSPs and a recurring revenue, Zenith was reported to be 30 million when it sold out. So what's going on?
Are the big brothers so desperate to get into the SMB market, which will shrink day by day for RMM companies at least, thanks to cloud?